The Case Against Trying to Stabilize the Dollar / Martin Feldstein.

By:

Feldstein, Martin

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w2838.Publication details: Cambridge, Mass. National Bureau of Economic Research 1989.Description: 1 online resource: illustrations (black and white)Subject(s):

F - International Economics

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: Better domestic economic policies in the 15 years since the collapse of the Bretton Woods system would have prevented the extreme fluctuations of the dollar's exchange value during those years. The pursuit of policies here and abroad that are appropriate for domestic growth in the future should reduce the likelihood of such substantial exchange rate swings in the years ahead. But elevating exchange rate stability to a separate goal of economic policy could have serious adverse consequences. Trying to achieve that goal would mean diverting monetary and fiscal policies from their customary roles and thereby, risking excessive inflation and unemployment and inadequate capital formation. Succeeding in the efforts to achieve dollar stability would mean harmful distortions in the balance of trade and in the international flow of capital.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w2838 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w28377 Liquidity, Pledgeability, and the Nature of Lending /	nber w28378 Contracting in Peer Networks /	nber w28379 The Organization of Innovation: Property Rights and the Outsourcing Decision /	nber w2838 The Case Against Trying to Stabilize the Dollar /	nber w28380 A Second-best Argument for Low Optimal Tariffs /	nber w28381 The Impact of Regulation on Innovation /	nber w28382 Gender Differences in (some) Formative Inputs to Child Development /	Next

February 1989.

Better domestic economic policies in the 15 years since the collapse of the Bretton Woods system would have prevented the extreme fluctuations of the dollar's exchange value during those years. The pursuit of policies here and abroad that are appropriate for domestic growth in the future should reduce the likelihood of such substantial exchange rate swings in the years ahead. But elevating exchange rate stability to a separate goal of economic policy could have serious adverse consequences. Trying to achieve that goal would mean diverting monetary and fiscal policies from their customary roles and thereby, risking excessive inflation and unemployment and inadequate capital formation. Succeeding in the efforts to achieve dollar stability would mean harmful distortions in the balance of trade and in the international flow of capital.